ESG & Sustainability: Shaping A Digitised, Environment-Friendly Procurement Value Chain

This article is authored by Ashwani Narang, Vice President and Country Head, Intelligent Spend Group, SAP Indian Subcontinent, and published in partnership with BloombergQuint Brand Studio.

The turn of the new decade saw the rise of ambitious sustainability goals. Products with sustainability labels received increased traction. Around the same time, social media influencers were voicing their support for ethical work practices and security for frontline supply chain workers. As a result, sustainable procurement became a priority in enterprise strategic agendas. But in 2020, when Covid-19 rocked the world economy, new challenges emerged.

The impact of the pandemic on supply chains was disruptive. Many feared that the crisis would dampen growing enthusiasm to invest in sustainable procurement practices. But it did the just the opposite.

After an initial slump, sustainable procurement was back on the radar. In a recent survey report by SAP, powered by the Indian Institute of Materials Management (IIMM), a majority of respondents ranked sustainability as a top procurement priority in the next two years. This collective confidence to drive supply chain sustainability initiatives is a direct result of several recent events and developments. For example, weather disasters in 2020 saw businesses around the world suffer losses in the billions. This, in turn, brought climate change issues to the forefront of sustainability discussions.

On the regulatory side of things too, 2020 proved to be definitive year for the sustainability movement. New regulations urged organisations to look at procurement from the sustainability perspective. In one such recent example, SEBI published a circular on Business Responsibility and Sustainability Reporting (BRSR) for India’s top 1000 companies by market capitalisation. The circular is as a welcome change from the erstwhile Business Responsibility Reporting (BRR) regime which had several gaps in reporting requirements. The BRSR will help regulatory authorities create a single source of sustainability data that shareholders, investors, and the public can use.

Towards green procurement—Technology makes the difference

With 2021 adding greater momentum to sustainability targets, the future will likely bring more investments in green procurement. Pressure from stakeholders on companies to deliver on their sustainability agendas is also expected to increase. To meet these demands, companies must increase supply chain transparency. This includes providing disclosure of their procurement activities and practices.

As supply chain sustainability gains traction, more procurement professionals will have to rise to the occasion as sustainability champions. To help drive progress, they will need to create more anti-fragile and greener supply chains. And this is where technology can help them create a difference.

Technology provides an opportunity to advance and empower a company’s sustainability agenda. Emerging tech such as AI, IoT, cloud, and robotics play a critical role in ensuring a sustainable supply chain. They enable seamless data transfer, real-time supplier visibility, and sustainability forecasts. Here are a few examples of how technology can drive a sustainability revolution in procurement.

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